McConnell Remarks On Internet Sales Tax Bill

By imposing this new Internet Tax, states would suddenly be empowered to force online retailers to simultaneously comply with all the different tax codes of all the states in which their customers reside. That’s no small feat. From what I’m told, there are nearly 10,000 state, local, and municipal tax codes nationwide. And while complying with so many codes might not be a big deal for large online retailers, it’s a huge burden on the little guys. So small businesses owners are worried, and justifiably so.’

“This week, the Senate is debating a bill that would authorize states to require retailers to collect taxes on remote sales. “Now, I recognize there are a range of views on this bill. And those viewpoints don’t break evenly along partisan lines. Nor do they really fall along traditional ideological lines.

“Speaking for myself, however, I intend to oppose the bill. Here’s why. “For me, the issue boils down to that fact that the legislation we’re considering would create an enormous compliance burden for a lot of small businesses out there, making them tax collectors for thousands of far-away jurisdictions. Just as importantly, this legislation would increase the tax burden on Kentuckians. “And as I’ve said before, I don’t think the people of Kentucky sent me here to help them pay higher taxes.

“Brick-and-mortar companies complain about the inequity that exists in current law, where their customers have to pay taxes that online shoppers do not. And I am sympathetic to that concern. “But by imposing this new Internet Tax, states would suddenly be empowered to force online retailers to simultaneously comply with all the different tax codes of all the states in which their customers reside. That’s no small feat.

“From what I’m told, there are nearly 10,000 state, local, and municipal tax codes nationwide. And while complying with so many codes might not be a big deal for large online retailers, it’s a huge burden on the little guys. “So small businesses owners are worried, and justifiably so. “I know they are in Kentucky, because so many keep writing to share their concerns with me. “One small business owner lamented that ‘small online business owner[s] ha[d] been silenced and pushed to the side’ in this debate as larger companies ‘[press] for the changes to take effect as quickly as possible.’

“‘The simple matter of the fact,’ he said, ‘is that any business with [fewer] than 100 employees would be completely overwhelmed by applying, keeping, updating, and reporting sales tax for every state and tax zone in the United States.’ “It’s hard to argue with that.

“Moreover, this is a bill that – once again, as happens all-to-often in this Senate – hasn’t been run through committee, hasn’t been properly vetted, and hasn’t yet had the kinks worked out of it. “It’s not like there aren’t other things that can be done to improve tax compliance from online shoppers – things that don’t require us to turn private businesses into tax collectors for remote state governments. “Most states already impose a ‘use tax,’ for instance, which requires taxpayers to report how much they’ve purchased via the internet.

“Individual states that are concerned about this issue could choose to enforce their own existing ‘use taxes’ rather than expect the federal government to impose sweeping legislation to empower states to reach across their borders to collect taxes. “And let’s not forget the fact that the Internet has been such an enormous source of innovation and convenience for our constituents, our country, and our economy – even in tough economic times. “But that’s largely because the government has kept its nose out and allowed innovation to flourish. “So I won’t be supporting this bill.

“If states decide they need this revenue, they should keep in mind the tremendous burden they’ll be placing on the little guys who do so much to drive this economy. In my view, the federal government should be looking for ways to help, not hurt, these folks.

“Let’s be honest: the big guys can take care of themselves. Let’s not make it even harder for their smaller competitors.”